QuestionsQuestions (Republic Act No. 9136)
Generation, transmission, distribution, and supply (Section 5).
No. Power generation “shall not be considered a public utility operation,” so persons/entities engaged in generation and supply of electricity are not required to secure a national franchise (Section 6).
Prices charged by generation companies for supply of electricity shall not be subject to regulation by the ERC except as otherwise provided in the Act (Section 6).
Transmission is a regulated common carrier business subject to ERC ratemaking powers, and the ERC sets standards distinguishing transmission from subtransmission assets and enforces compliance to Grid Code (Sections 7 and 9).
Transmission is: 230 kV and above (Luzon Grid); 69 kV and above (Visayas and isolated distribution systems); and 138 kV and above (Mindanao Grid) pending ERC standards. Otherwise, assets fall under subtransmission classification (Section 7).
TRANSCO is created to assume NPC’s electrical transmission function, including planning, construction, centralized operation and maintenance of high voltage transmission facilities, grid interconnections, and ancillary services (Section 8).
Within six (6) months from effectivity, NPC’s transmission and subtransmission facilities and all assets related to transmission operations (including nationwide franchise) are transferred to TRANSCO. Transmission-related liabilities of NPC are transferred to and assumed by PSALM (Section 8).
Subtransmission functions/assets are segregated from transmission; they are operated and maintained by TRANSCO until disposal to qualified distribution utilities. TRANSCO must transfer these functions/assets to distribution utilities within two (2) years or at the start of open access, whichever comes earlier (Section 8).
ERC must ensure NPC provides open and non-discriminatory access prior to TRANSCO transfer and before Grid Code promulgation; thereafter, TRANSCO itself must provide open and non-discriminatory access to its transmission system to all users (Sections 8 and 9).
Act as system operator for nationwide transmission/subtransmission; provide open and non-discriminatory access; ensure reliability/security/stability/integrity per Grid Code; improve/expand facilities consistent with Grid Code and Transmission Development Plan (TDP); provide central dispatch consistent with market dispatch schedule and bilateral contracts; prepare the TDP with consultation (Section 9).
Powers are vested in a Board with a Chairman (ex officio DOF Secretary) and six (6) members: DOE Secretary, DENR Secretary, TRANSCO President, and three presidential appointees representing Luzon/Visayas/Mindanao. Board members and relatives within the 4th civil degree may not have interests as investor/officer/director in any generation company/distribution utility or other entity engaged in transmitting/generating/supplying electricity covered by ERC restrictions (Section 11).
TRANSCO may sue and be sued, enter contracts, adopt a corporate seal, have continuous succession, borrow funds and issue bonds/indebtedness (bond issues need President approval upon recommendation of Secretary of Finance), maintain a provident fund, and generally exercise corporate powers consistent with the Act (Section 10).
The power to grant franchises for transmission and distribution is vested exclusively in Congress; inconsistent laws are repealed/modified accordingly. Existing franchises are allowed to run their full term (Section 27).
Retail competition and open access on distribution wires must be implemented not later than three (3) years from effectivity, subject to conditions including spot market establishment, ERC approvals/unbundling, cross-subsidy removal scheme, privatization requirements, and transfer of NPC contracted energy management/control. Initially, end-users with monthly average peak demand of at least 1 MW (preceding 12 months) are contestable; after two years, threshold reduces to 750 kW, and aggregators may supply within contiguous areas aggregating at least 750 kW (Section 31).
Retail rate is the total price paid by end-users comprising generation, transmission and ancillary services, distribution, supply, and other related charges. Utilities/suppliers must identify and segregate components such as customer service charge (retail bill) and supplier’s charge in billing (Definitions; Sections 25 and 29).
It is a charge imposed on all electricity end-users determined by ERC for purposes such as stranded debts and contract costs recovery, missionary electrification, tax/royalty equalization for indigenous vs imported fuels, an environmental fund charge (0.0025/kWh), and cross-subsidy accounting for up to three years. It is non-bypassable and collected monthly by distribution utilities, remitted to PSALM (Section 34).